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Mitsubishi to make Outlander Sport at Illinois plant

The Outlander Sport, which went on sale in the United States in late October, will replace all local production of the Endeavor SUV, Galant sedan and Eclipse and Eclipse Spyder sporty cars.

Mitsubishi Motors Corp. said Friday it will invest $100 million to build the Outlander Sport crossover at its Normal, Ill., plant starting in summer 2012.

Mitsubishi expects annual output of 50,000 units, with half dedicated to North America and the rest for export to Russia, Latin America and the Middle East.

Mitsubishi Motors North America President Shinichi Kurihara, Illinois Gov. Patrick Quinn and UAW President Bob King made the announcement at the plant Friday morning.

The Outlander Sport, which went on sale in the United States in late October, will replace all local production of the Endeavor SUV, Galant sedan and Eclipse and Eclipse Spyder sporty cars.

Those models will be phased out by the end of 2013.

“The market is undergoing great transformation,” President Osamu Masuko said in remarks that were prepared before the announcement. “It is downsizing, and sports cars are very difficult to sell. There is a change in customers' needs. So we'd like to shift production to compact SUVs.”

The decision to introduce the Outlander Sport ends months of uncertainty about what Mitsubishi would do with the Normal factory--its only North America assembly plant.

The 25-year-old factory had annual capacity for 240,000 vehicles when it was operated jointly by Mitsubishi and Chrysler. But Chrysler long ago pulled out, and the Japanese carmaker produced just 29,375 vehicles there in 2010.

Masuko said last summer that Mitsubishi slashed costs, partly through job cuts, to bring the plant's break-even point down to around 70,000 units a year.

Early projections

In the United States, Mitsubishi sold 30 Outlander Sport units in October; 688 in November; and 972 in December for a total of 1,690 vehicles last year. But in January, it sold 1,065.

“This is the newest vehicle that we have,” Masuko said. “It is being very well received and highly evaluated worldwide and volume is rising. I think production can be accelerated.”

Mitsubishi sells the Outlander Sport in 80 countries. The company has produced 97,520 units since the model went on sale in Japan in February 2011.

Mitsubishi expects to lose no Outlander Sport production from its Okazaki plant in Japan, where the Outlander Sport currently is made alongside the Colt small car.

Mitsubishi won't need to interrupt production at Normal to retool the plant. And it plans to keep the labor force steady at its current level of around 1,300.

New UAW deal

Masuko credited a new labor pact reached with UAW for breathing new life into the factory. Under the deal announced in December, workers agreed to lower wages to keep the plant open.

“No job cuts,” Masuko said. “It was decided there would be a reduction in worker income, and that's why we were able to continue on. It was a concerted effort by everyone involved.”

The state of Illinois is also awarding Mitsubishi $29 million in tax breaks over 10 years as an incentive to keep the plant open.

Mitsubishi may eventually add other models to the plant's lineup, Masuko said.

“After we evaluate the market situation and sales situation, if possible we would like to expand and maybe in the future there is the possibility of overtime,” he said.

Green car plans

The loss of Mitsubishi's current U.S.-made lineup eliminates four models that account for just over a third of the company's domestic sales. But Masuko says sales shouldn't be dented because Mitsubishi has several electric and hybrid vehicles in its pipeline.

The first new arrival will be the low-volume i electric vehicle due this year. A Thailand-made global small car is scheduled to arrive in early 2013, and from 2012-15 Mitsubishi plans to bring five more models or variations: an additional electric vehicle and four plug-in hybrids.

If the overhaul works, Masuko says Mitsubishi could nearly double U.S. sales to 100,000 units in the fiscal year ending March 31, 2014, from 55,683 units in 2010.